If We Had Only Known…

by Procino-Wells & Woodland, LLC

Contributed by Thad Rauhauser, Elder Law Assistant

My mother worked a variety of jobs when I was growing up and my father worked in the shipping department of a manufacturer. They both worked very hard, always with an eye toward the future. They took advantage of an IRA that paid 10% interest (unimaginable today) which produced great earnings. My father passed away in 1988.

As my mother grew older, she progressed as most aging people do: sold the house, moved to an apartment, moved from the apartment to assisted living, and eventually moved to a skilled nursing facility. Since I lived 150 miles away, my sister became the point person for keeping track of my mother’s medical and financial affairs. In 2009, as my mother’s physical and mental condition deteriorated, my sister continued with the medical side of things, but I took over managing her finances. After having new estate planning documents drawn up, pre-planning and paying for her funeral, she had about $220,000.00. While not a lot of money to some, my mother was always in disbelief that she and my father could have saved so much. I calculated that even with increases in her expenses and earning nothing on her investments, she had enough money to last until 2015 between assets and Social Security income.

Sometimes things don’t go according to the plan. Her physical and mental condition worsened to the point where moving into a skilled nursing facility was unavoidable. A step we didn’t want to take because she always said, “Please don’t put me in one of those places.” We were lucky to get her into a facility that was clean, had lots of activities, and compassionate staff that fell in love with her. She called everyone on the staff “Chickie” (a way for her to cover that she couldn’t remember their name) and they’d call her “Chickie” right back. The down side was that an assisted living bill at $3,250.00 per month became an almost $10,000.00 monthly skilled nursing bill overnight. Instantly the 2015 projection became 2013. What were we to do? I guess the same thing everyone else does……..pay for her care until there is no more money and then apply for Medicaid.

Medicaid is a federal program that is administered by each state, and because of that, the rules vary from state to state. There are two types of Medicaid, one being medical benefits for those with low incomes and the other being assistance to cover most of the cost of long term care. Some states allow for in-home care or assisted living before skilled nursing care becomes necessary. Delaware is fortunate that our Medicaid program will provide benefits at all three levels of long term care and that it includes the medical and prescriptions benefits of the other program. For veterans that meet certain criteria, or their surviving spouses, there are also benefits available through the VA.

If we had only known that we could have pre-planned back when she moved from the house and been able to protect the majority of her assets to later pay for the few things that Medicaid does not cover. If we had only known that even if we didn’t act until later (within the 5 year look back period when financial transactions have to be disclosed) that we could have still preserved part of her assets. If we had only known that the allowed “spend down” strategies could have benefited her and her family. If we had only known that depleting our mother’s assets paying for her care wasn’t necessary.

How could we have known? While taking care of her finances, I learned a lot…Medicare’s Part A vs. Part B vs. Part D, 100 days of rehab Medicare benefit after 3 midnight stays in the hospital, tax implications of depleting an IRA, open enrollment, supplemental insurance plans (that have different levels too), co-pays, deductibles, “donut holes” (not the good kind) and on and on. But even with all that, I didn’t know anything about Medicaid and the benefit it could have provided so that my mother didn’t have to go “bankrupt” paying for her care. My mother would ask, “Is everything set up for you kids to get my money?” She continued to ask that after all of her money was gone and I continued to tell her “yes”; which is something you do with an Alzheimers patient…just agree. To think, for the cost of a month or two of skilled nursing care, if I had only hired an Elder Law attorney, I would have been telling the truth. If I had only known there were Elder Law attorneys like Procino-Wells and Woodland, who specialize in Asset Protection Planning and are there to provide guidance in becoming eligible and applying for benefits.